Is Bipartisan Tax Reform Possible? Wyden and Gregg Hope So

April 15th has long been a day of intense partisan sniping in Washington -- and this year is no exception as Tea Party activists prepare to descend on the nation's capital.

But earlier today, on the eve of this year's tax filing deadline, two centrist senators came together at the Washington, DC, offices of the Bipartisan Policy Center to promote their bipartisan tax overhaul proposal.

The legislation, which is formally known as the "Bipartisan Tax Fairness and Simplification Act of 2010," is co-sponsored by New Hampshire Republican Sen. Judd Gregg and Oregon Democratic Sen. Ron Wyden.

The premise of the bill is that any bipartisan legislation must balance Democratic concerns about fairness and Republican concerns about growth.

"This is the ultimate jobs bill," said Gregg. "It's the most significant tax simplification since Reagan-Bill Bradley in 1986."

Under current law, the top marginal rate on individual income is 35 percent and is scheduled to rise to 39.6 percent in 2011.

The Wyden-Gregg proposal reduces the number of income tax brackets for individuals from six to three -- namely, 15 percent 25 percent and 35 -- and eliminates the Alternative Minimum Tax, which forces millions of taxpayers to calculate their taxes twice and pay the higher amount.

It aims to improve American economic competitveness by lowering the top corporate tax rate to a single flate rate of 24 percent. At present, the top corporate tax rate reaches 35 percent.

It also aims to improve the business climate by exempting taxpayers from paying taxes on the first 35 percent of their long-term capital gains income.

To improve saving for retirement, the bill consolidates the three existing types of IRAs into a new Retirement Savings Account and a new Lifetime Savings Account so that a married couple will be able to contribute up to $14,000 per year to tax-favored retirement and savings accounts.

The legislation has not yet been officially scored but an expert with the Congressional Research Service has told Wyden and Gregg that the proposal appears to be deficit neutral.

Some prominent deficit hawks, like former Comptroller General of the United States David Walker, are unsure of the wisdom of proposing a tax plan which is deficit neutral. Walker, a registered independent who was in attendance at today's event, told ABC News that balancing the budget over time will require new tax revenue in addition to even more substantial spending cuts.

Wyden and Gregg said that they believe that simplifying the tax code and lowering the corporate tax rate will boost tax compliance, job creation, and, ultimately, tax revenue. They also said that proposing tax legislation that generates more revenue for the government than the current system would kill the chances of garnering Republican support.

The Wyden-Gregg proposal aims to pay for itself by closing a series of tax loopholes. In particular, the legislation calls for repealing the rule that allows US companies to defer taxes on their foreign income.

At the same time, the legislation leaves in place two popular tax breaks: the mortgage interest deduction and the tax exclusion for employer provided health insurance.

Gregg said they left those two tax breaks untouched because doing otherwise would have made the proposal dead on arrival.

Could the Wyden-Gregg proposal get through Congress?

Wyden acknowledged that conventional wisdom holds that his proposal has to wait until at least 2011 by which time Gregg will no longer be in the Senate.

Wyden is hoping, however, that Gregg will be able to promote the legislation this year as a member of President Obama's fiscal commission.

Wyden said that some senators have told him that they want to move on the proposal this year as a way to promote job creation.

Wyden is also hoping that the White House will warm to his proposal.

He noted that an earlier, somewhat different, version of his proposal was co-sponsored in the House by former Rep. Rahm Emanuel, D-Ill., who now serves as White House chief of staff.